A State-Level Analysis of Okun's Law

Amy Guisinger, Ruben Hernandez-Murillo, Michael Owyang and Tara Sinclair

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: Okun’s law is an empirical relationship that measures the correlation between the deviation of the unemployment rate from its natural rate and the deviation of output growth from its potential. In this paper, we estimate Okun’s coefficients for each U.S. state and examine the potential factors that explain the heterogeneity of the estimated Okun relationships. We find that indicators of more flexible labor markets (higher levels of education achievement in the population, lower rate of unionization, and a higher share of non-manufacturing employment) are important determinants of the differences in Okun’s coefficient across states. Finally, we show that Okun’s relationship is not stable across specifications, which can lead to inaccurate estimates of the potential determinants of Okun’s coefficient.

JEL-codes: C32 E32 R11 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-09
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.gwu.edu/~iiep/assets/docs/papers/2015WP ... lairIIEPWP201517.pdf (application/pdf)

Related works:
Journal Article: A state-level analysis of Okun's law (2018)
Working Paper: A State-Level Analysis of Okun’s Law (2015)
Working Paper: A State-Level Analysis of Okun's Law (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2015-17

Access Statistics for this paper

More papers in Working Papers from The George Washington University, Institute for International Economic Policy Contact information at EDIRC.
Bibliographic data for series maintained by Kyle Renner ().